London, UK – October 22, 2020 – Leases of electric cars by companies in the UK soared by 90% in the last six months as more firms took advantage of lower taxes amid a government drive to promote the use of eco-friendly vehicles, according to a leading car leasing firm.
“The surge in uptake of EV vehicles this year has been a direct result of the government’s decision to scrap the Benefit in Kind tax back in April. Company car drivers are now able to get much cheaper deals on the latest EVs and also benefit from cheaper running costs, maintenance, and road tax,” said Aaron Sherlock of Kardi Leasing.
The government announced the elimination of the Benefit in Kind tax for company car drivers using an electric vehicle for 2020/21 in April. The tax break was implemented to help boost the EV industry and encourage more businesses to provide their employees with energy-efficient vehicles.
It’s hoped the initiative will improve the government’s chances of hitting its 2050 emissions targets, as well as achieving its “Road to Zero” targets of at least half of all new cars to be ultra-low emission by 2030.
Since April, company car drivers are now able to pay for their EV via salary sacrifice, and it’s completely tax-free. Prior to April, drivers had to pay a 16% Benefit in Kind tax, which has now been scrapped for EV only.
Those who wish to continue driving regular fossil fuel cars will still have to pay 27% Benefit in Kind tax.
The welcomed tax break has allowed many to benefit from a 30-40% cut in their monthly leasing payments. The figure is thought to be up to 60% for the highest earners.
As an example, a person on a high tax rate would be able to get themselves a brand new Tesla Model 3 Standard Range Plus with zero upfront costs for £342 per month for 48 months, including insurance, servicing and maintenance. A non-electric vehicle of a similar engine and performance would cost £400 plus, excluding insurance, servicing and maintenance.
The tax break will last until April 2021. Then the government will introduce a 1% tax, followed by 2% in 2022. EV leases will still be hugely attractive at those small percentages compared to fossil fuel cars.
The cut to Benefit in Kind tax in April may have been influenced by pressure from the Transport & Environment (T&E) organisation. T&E is Europe’s leading clean transport campaign group and has been an integral force in shaping some of Europe’s most important environmental laws.
T&E has been putting considerable pressure on the government, insisting that tax breaks will help to incentivise people to switch from fossil fuel to electric cars. A damning T&E analysis of UK and EU subsidies for fossil fuel company cars may have been the final nudge UK policymakers needed to introduce this tax break.
With as many as six out of 10 cars in the UK and Europe being company cars, the tax incentive should help the UK become a world leader in the uptake and use of EV.
“The cut to Benefit in Kind tax is an excellent addition to other EV incentives recently introduced by the UK government, including the £3,000 Government plug-in car grant, the £350 Government home charging scheme, the exemption from Vehicle Excise Duty and the London Congestion Charge,” said Kardi Leasing’s Sherlock.
“On top of all the incentives above, EV owners can also benefit from significant fuel, tax and maintenance savings,” he added.
For more information about Kardi Vehicles and company EV lease deals, please visit https://kardileasing.co.uk/lp/mercedes-benz-leasing.